Initial investment at various sale prices Edwards Manufacturing Company (EMC) is considering replacing one machine with another. The old machine was purchased 3 years ago for an installed cost of $10,000. The firm is depreciating the machine under MACRS, using a 5-year recovery period. (See table for the applicable depreciation percentages.) The new machine costs $24,100 and requires $2,000 in installation costs. The firm is subject to a 40% tax rate. In each of the following cases, calculate the initial investment for the replacement. a. EMC sells the old machine for $12,900. b. EMC sells the old machine for $7,030. Data Table c. EMC sells the old machine for $2,900. d. EMC sells the old machine for $1,570. Calculate the initial investment at various sale prices below. (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) a. EMC sells the old machine for $12,900. (Round to the ne (a) Cost of new asset $ Installation cost Total installed cost $ Proceeds from sale of old asset $ $ Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year Recovery year 3 years 5 years 7 years 10 years 1 33% 20% 14% 10% 2 45% 32% 25% 18% 3 15% 19% 18% 14% 4 7% 12% 12% 12% 5 12% 9% 9% 6 5% 9% 8% 7 9% 7% 8 4% 6% 9 6% 10 6% 11 4% Totals 100% 100% 100% 100% *These percentages have been rounded to the nearest whole percent to simplify calculations while retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance (200%) depreciation using the Tax on sale of old asset $ Total after-tax proceeds Initial investment $ Enter any number in the edit fields and then click Check 3 Pemaining Initial investment at various sale prices Edwards Manufacturing Company (EMC) is considering replacing one machine with another. The old machine was purchased 3 years ago for an installed cost of $10,000. The firm is depreciating the machine under MACRS, using a 5-year recovery period. (See table for the applicable depreciation percentages.) The new machine costs $24,100 and requires $2,000 in installation costs. The firm is subject to a 40% tax rate. In each of the following cases, calculate the initial investment for the replacement. a. EMC sells the old machine for $12,900. b. EMC sells the old machine for $7,030. Data Table c. EMC sells the old machine for $2,900. d. EMC sells the old machine for $1,570. Calculate the initial investment at various sale prices below. (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) a. EMC sells the old machine for $12,900. (Round to the ne (a) Cost of new asset $ Installation cost Total installed cost $ Proceeds from sale of old asset $ $ Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year Recovery year 3 years 5 years 7 years 10 years 1 33% 20% 14% 10% 2 45% 32% 25% 18% 3 15% 19% 18% 14% 4 7% 12% 12% 12% 5 12% 9% 9% 6 5% 9% 8% 7 9% 7% 8 4% 6% 9 6% 10 6% 11 4% Totals 100% 100% 100% 100% *These percentages have been rounded to the nearest whole percent to simplify calculations while retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance (200%) depreciation using the Tax on sale of old asset $ Total after-tax proceeds Initial investment $ Enter any number in the edit fields and then click Check 3 Pemaining
